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Will top CLT-UFA duo find recognition?

Once in a while, the media and entertainment world produces visionaries whose surnames, effectively, become trademarks. Think Turner, Murdoch and, granddaddy of them all, Disney. But Sautter and Schmidt-Holtz?

These two names belong to Remy Sautter and Roll Schmidt-Holtz, the two CEOs of the newly created CLT-UFA, which is now Europe's biggest TV and entertainment group. Sautter is responsible for TV in the non-German-speaking markets and for radio. Schmidt-Holtz looks after international rights and TV in the German-speaking countries.

CLT-UFA, an operation with a $3 billion annual turnover and headquarters in Luxembourg and Hamburg, Germany, officially launched at the start of this year. A new, more relaxed broadcast law allowed for the merger of CLT, the Luxembourg-based broadcast giant, and UFA, the audiovisual arm of Germany's Bertelsmann, the world's third largest media conglomerate.

"What belongs together comes together. We are fulfilling the ambitious dreams of [the] original founders, who always envisioned a strong international family of TV, radio and production companies," said Schmidt-Holtz. "The new legislative framework allows us, at last, to compete with U.S. companies on a level playing field."

Therein lies the crux of the matter. For it is now Sautter and Schmidt-Holtz's duty to give CLT-UFA worldwide status. They need the international profile already associated with Ted Turner's Time Warner, Rupert Murdoch's News Corp. and Michael Eisner's Walt Disney Company.

Moreover, those three media giants are making major inroads in Germany, the home turf of CLT-UFA's parent company, Bertelsmann. Time Warner is a shareholder in the German news channel n-tv; Murdoch owns part of entertainment channel Vox; and Disney and CLT-UFA are 50/50 partners in Super RTL.

However, it is the global market that offers the real challenge for CLT-UFA. The company operates 21 TV stations and 22 radio stations in 11 European countries. The flagship property is the ad-supported German terrestrial channel RTL, recognized as Europe's single biggest channel. CLT-UFA's other channels in Germany include RTL2, Super RTL, Vox and the terrestrial pay-TV channel Premiere. Other ventures include M6 and TMC in France; RTL4, Veronica and RTL TV1 in the Benelux countries; and the U.K.'s new terrestrial channel, Channel 5. Activities outside Western Europe include RTL7 in Poland and a recently acquired concession to launch RTL Klub in Hungary by the end of the year. Among CLT-UFA's lucrative sports rights are the Europe Cup games, which involve 100 soccer clubs in 28 countries, and Wimbledon Tennis.

Some ventures, such as the planned German pay-TV network Club RTL, have fallen by the wayside.

Rumors that Bertelsmann was no longer interested in digital TV have been squashed. "We're going to keep expanding our digital pay-TV interest," said Nikolaus Formanek, vp of Press Relations at CLT-UFA."We have shares in [French digital network] Television Par Satellite, and Premiere is now also available in digital signals." Bertelsmann recently agreed to an equal joint ownership of Premiere with the Kirch Group, and the two are going ahead with plans to introduce digital TV on 150 satellite and cable channels over the next 10 years. Premiere will be supplied with sports programming from CLT-UFA's stable of sports rights.

With the recent spate of megamergers, including Time Warner/Turner Broadcasting System and Disney/Capital Cities/ABC, CLT-UFA will need more cash to match its competitors' global impact. CLT-UFA has already gotten more than $890 million from Bertelsmann in order to complete its own merger. But this is a ruthless business, and one-upmanship, immediate profitability and endless amounts of cash are crucial to survival.

The company's options are to bring in new partners or to go on the stock market. There are reports that News Corp. and Disney want more than shares in individual channels; they are allegedly fighting tooth and nail for a share of CLT-UFA itself.

The European press has reported that CLT-UFA management is seeking to float the company on the stock exchange. Although the management denies this, it admits that there is no technical obstacle that would block a public offering.

This brings us back to the two CEOs. Do they have the vision to turn CLT-UFA into a household name? And will their surnames soon be rolling off tongues as easily as "Turner," "Murdoch" or even "Kirch"?

The two say that their next moves will be to boost business in the emerging ad-supported TV markets, which range from Eastern Europe to Scandinavia; to boost the profit margins of their already successful ventures in Germany and Belgium; and to further exploit their copyright properties.

With Bertelsmann's library of some of the best movies, music recordings, books and magazines, CLT-UFA has the assets to do great things. In the fastmoving world of TV and entertainment, this could be the company's make-or-break year.
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Title Annotation:CEOs Remy Sautter and Rolf Schmidt-Holtz
Author:Koranteng, Juliana
Publication:Video Age International
Date:Oct 1, 1997
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